Chang Industries has 2,600 defective units of product that already cost $26 each to produce. A salvage company will purchase the defective units as is for $11 each. Chang's production manager reports that the defects can be corrected for $18 per unit, enabling them to be sold at their regular market price of $27. The $26 per unit is a: what type of cost?

• Sunk cost.

• Opportunity cost.

• Incremental cost.

• Out-of-pocket cost.